A new survey from Canada’s largest bank has revealed that more and more Canadians would consider downsizing or renting instead of owning so they could generate more income in retirement.
Results from the 2019 RBC Retirement Myths & Realities Poll found that 52 percent of non-retired respondents aged 50-plus said they would downsize or rent instead of owning, up from 36 percent in 2018. This was a Canada-wide average, with respondents in British Columbia and Ontario being more likely to consider downsizing or renting and Quebec respondents being less likely to consider those options.
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The survey, conducted by Ipsos between April 2nd and April 8th, 2019, asked 1,800 Canadians aged 50 and older a handful of general questions about their financial picture heading into retirement and how they expect to use their home as they transitioned out of the workforce.
According to the survey, the number of Canadians who expect to use their home equity as one source of retirement income is also one the rise. Fifty-five percent said they’d leverage their home equity in retirement in the 2019 results, up from 49 percent the year before.
“We spend most of our working years saving for retirement and when the time comes, we hope the savings will provide us the freedom to enjoy the lifestyle we want,” says Nicole Wells, Vice President, Home Equity Financing, RBC, in a media release.
“More and more, we’re seeing Canadians rely on their home as part of their retirement plans. Whether it’s rightsizing or accessing equity in your home, if your residence is part of the journey to retirement, it’s important to be sure you understand the path that will get you there,” she continues.
The survey also highlighted just how many Canadians who are nearing the end of their careers expect to still carry debt even into retirement. Nearly one-in-five respondents said they expected to carry debt, with two-thirds of this group stating that they would likely still be paying off their mortgage in their retirement.
When discussing the origins and realities of debt weighing on retired Canadians, the RBC team pointed to other recent bank consumer research that showed the extent to which funding their adult children’s lives impacts retirement plans.
RBC recently found that 28 percent of first-time and prospective homebuyers purchased or planned on purchasing with the financial support of their families. Similarly, 76 percent of parents say they still support their 18- to 35-year-olds financially. As a result of this desire or perceived obligation to support their adult children, over one-third of Canadians nearing retirement are concerned about the potential impact to their savings.
“As we’re seeing parents support their children later in life, that can come with a major impact to savings and retirement plans. The best approach is to start thinking ahead, long before retirement is within reach,” says Wells.